Passing the Torch
“The wrong person cannot be appointed to command. Lin Hsiang-ju, the Prime Minister of Chao, said: ‘Chao Kua is merely able to read his father’s books, and is as yet ignorant of correlating changing circumstances. Now Your Majesty, on account of his name, makes him the commander-in-chief. This is like glueing the pegs of a lute and then trying to tune it.’”
You might be thinking about stepping down one day and handing your business off to someone in your family. That might be a great idea—or it might be the worst idea ever. How do you know they’ll take good care of the business? Will they grow it, or will they burn it down?
This is the most important decision you’ll ever make for your business. The right leader can carry on your legacy, grow your business, and protect your employees. The wrong leader can undo everything you’ve worked for. As Sun Tzu warned, it’s not enough to give someone the title of leader—they need the skill, adaptability, and vision to earn it. Let’s talk about how to make the critical decision of who should lead your business when you step back—whether it’s a family member, a trusted employee, or an outside hire—and how to set your business, your team, and your successor up for success.
The Double-Edged Sword of Nepotism
Nepotism often gets a bad reputation, but it’s not inherently bad. In family-owned businesses, looking to the next generation is a natural step. When handled thoughtfully, promoting a family member can protect the business’s legacy and tap into the deep, hard-earned knowledge they’ve gained from growing up immersed in the company. But when done poorly, nepotism can lead to frustration, disengagement, and even the collapse of your business.
The real issue isn’t nepotism itself—it’s appointing someone who isn’t prepared for leadership. Even when a family member has potential, the perception of favoritism can create challenges.
Example: At Holly Pines Tree Farm, the owner promoted her eldest son to operations manager. Though he’d spent years around the business, he didn’t have the leadership skills needed to direct a team or solve problems on the fly. Employees became frustrated, and customer complaints started piling up. Recognizing the issue, the owner reassigned her son to work under the general manager while providing him with mentorship and training. Over time, he developed the skills needed to lead effectively and earned the trust of the staff.
Challenge: If you’re thinking about handing your business off to a family member or close connection, create a development plan that includes specific training goals, mentoring opportunities, and regular evaluations. This shows your team that leadership is based on merit and sets your successor up for success.
Leadership Isn’t About a Name
Titles and last names don’t make someone a leader—skills, experience, and adaptability do. Appointing the wrong person to a leadership role, no matter how well-meaning the decision, can destabilize a business.
Example: At Morning Roast Café, the owner needed to hire a new manager and was torn between promoting her niece, who had a degree in hospitality, and a longtime employee who had managed the café through its busiest seasons. Ultimately, the owner chose the experienced employee because she had proven her ability to lead under pressure. To keep the relationship with her niece strong, the owner encouraged her to take on a role in marketing—a skill she had shown interest and aptitude in. Over time, the niece’s efforts brought in new customers and boosted weekend sales.
Challenge: Create a detailed list of qualifications for your business’s leadership roles, including both the hard skills (like industry expertise or financial management) and soft skills (like communication and adaptability) that are essential for success. Evaluate your current leaders and potential successors against these criteria to identify strengths and areas for growth.
Experience Is Worth More Than Theories
Sun Tzu’s criticism of Chao Kua highlights a common leadership pitfall: assuming that theoretical knowledge is enough to navigate real-world challenges. The truth is, leaders need more than what they’ve read in books or learned in the classroom. They need hands-on experience to understand the complexities of their role.
Example: At Turning Pages Bookstore, the owner recognized the need for a new community events coordinator. Instead of simply hiring someone passionate about books, she selected a promising employee who shadowed the previous coordinator to learn event logistics, budgeting, and vendor management. With mentorship and preparation, the new coordinator avoided common pitfalls and organized a series of author readings that became the most successful events in the store’s history.
Challenge: Identify one team member with potential but limited hands-on experience. Assign them a specific project and pair them with a mentor who can provide guidance and feedback along the way. This ensures they build practical skills while having support to avoid mistakes.
Why Picking the Right Skills Matters
One of the biggest mistakes business owners make is assigning roles based on assumptions. Many think their teenage or college-aged relative should handle social media because they’re always on Instagram. But being a social media user is not the same as being a social media strategist.
Social media strategy isn’t about posting photos or going viral—it’s about creating campaigns that align with business goals, understanding analytics, crafting messages that connect with your audience, building trust, and driving sales. Assigning the wrong person to this role can result in wasted time, poor results, and missed opportunities.
Challenge: If you’re considering assigning someone to manage your social media—or any specialized role—evaluate whether they have the strategic skills required, not just user-level familiarity. Ask yourself: Can they create a content plan that aligns with your business goals? Can they analyze performance metrics to improve results? If not, invest in training or seek a professional with the right expertise to ensure your social media efforts drive meaningful growth.
Preparing the Next Generation of Leaders
The best leaders are developed, not appointed. Preparing a successor requires time, effort, and patience, but it’s the most effective way to ensure a smooth leadership transition.
Example: At Maple Valley Inn, the owner’s youngest daughter expressed interest in running the business but had little experience. Instead of promoting her immediately, the owner started her with smaller responsibilities, like managing the farmer’s market booth during the summer. Over the years, she gained skills in scheduling, customer service, and logistics. By the time the owner stepped back, she had the skills, confidence, and respect of the staff to run the inn.
Challenge: Identify a team member with leadership potential and design a six-month mentorship plan tailored to their growth. Start by assigning them a specific area of responsibility, such as managing a small team or overseeing a key project. Schedule monthly check-ins to provide guidance, evaluate their progress, and discuss lessons learned, gradually increasing their responsibilities as their confidence and skills grow.
Avoiding the Pitfalls of Unprepared Leaders
Sun Tzu’s warning about commanders who cannot adapt is as true in business as it is in war. An unprepared leader isn’t just ineffective—they can destabilize your entire business.
Example: At Poppy’s Pastries, the founder promoted a cousin to oversee marketing. While the cousin was enthusiastic, they didn’t understand the nuances of digital marketing. Campaigns fell flat, and sales stagnated. Recognizing the issue, the founder restructured the team, appointing a qualified barista with a marketing degree to the role. Within six months, the bakery saw a 35% increase in sales, with stronger customer engagement online.
Challenge: Assess your current leaders by identifying one recent situation where adaptability was critical—did they pivot effectively, or were they caught off guard? Based on your evaluation, outline specific training or resources, such as scenario-based workshops or coaching sessions, that could enhance their ability to respond to future challenges with agility and confidence.
Building a Culture Where Leadership Is Earned
A culture where leadership is earned, not inherited, ensures your business remains adaptable and resilient.
How to Build a Culture of Leadership Excellence:
- Prioritize transparency: Share the criteria for leadership roles with your team.
- Invest in development: Provide resources and training to help employees grow into leadership roles.
- Celebrate merit-based success: Publicly recognize and reward leaders who excel based on their performance.
Sun Tzu reminds us, “Victorious warriors win first and then go to war.” By cultivating capable leaders before they take charge, you set your business up for long-term success.
Your Next Steps:
- Audit your current leadership appointments. Are they based on merit?
- Create a leadership development plan that includes clear criteria, training opportunities, and mentorship.
- Regularly assess leadership performance and make adjustments as needed.
The success of your business depends on its leadership. Make thoughtful decisions, prioritize preparation, and create a legacy of strong, capable leaders. The right leadership isn’t just a choice—it’s a necessity.
